Stock Market Valuation with Real Options:: lessons from Netscape
Abstract
Discounted cash flow is the main tool for valuing projects and companies. Real options techniques can augment valuation. The case of Netscape is used to demonstrate this. We begin with a defensive cash flow scenario. On top of this, we superimpose a number of real options valuations. Some experts would dispute our methodology because it is not built upon market-priced risk. Nonetheless, it provides an approximate valuation. We prefer equity valuation using various methodologies, including real options where appropriate, to arrive at a range of value. But we cannot, using financial logic, justify the high Netscape flotation price.Download Info
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Bibliographic Info
Article provided by Elsevier in its journal European Management Journal.
Volume (Year): 20 (2002)
Issue (Month): 5 (October)
Pages: 512-526
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Related research
Keywords: Stock market valuation Real options Volatility Competitive advantage period;References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- K. Maris & K. Nikolopoulos & K. Giannelos & V. Assimakopoulos, 2007. "Options trading driven by volatility directional accuracy," Applied Economics, Taylor and Francis Journals, vol. 39(2), pages 253-260.
- G. Menzies & R. Bird & P. Dixon & M. Rimmer, 2010.
"The Economic Costs of US Stock Mispricing,"
Centre of Policy Studies/IMPACT Centre Working Papers
g-204, Monash University, Centre of Policy Studies/IMPACT Centre.
- Bird, R. & Menzies, G. & Dixon, P. & Rimmer, M., 2011. "The economic costs of US stock mispricing," Journal of Policy Modeling, Elsevier, vol. 33(4), pages 552-567, July.
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